Even with the late-day surge on Friday, the S&P 500 ended the day with an S&P 500 “earnings yield” of 6.37%, not nearly as attractive though as the yield from Thursday night, March 12th, which (using the forward 4-quarter estimate of $172.71) printed at 6.97%, just 3/100th’s away from the December, 2018 high earnings yield of 7%.
Maybe Thursday night, March 12th was the bottom.
S&P 500 Earnings data: (Source for forward estimate is IBES by Refinitiv):
- Fwd 4-qtr est: $172.71 vs last week’s $174.30
- rate of change: +2.94% vs last week’s 3.86%
- PE ratio: 15.7x vs last week’s 17x
- S&P 500 earnings yield: 6.37% vs 5.86% from last week, a pretty steep jump
Summary / conclusion: Reading some of the headlines from the conference call on Oracle’s fiscal Q3 ’20 which ended Feb ’20 last night, the database-cum-cloud giant guided to slightly better EPS growth for their traditionally strongest fiscal Q4 ended May ’20. Oracle (NYSE:ORCL) is doing a little better transitioning from on-premise organic licenses to cloud applications, but the decline in that legacy on premise business is still a drag on the entire business. The stock was up 8% on just over 2x average volume. Our earnings preview on Oracle was here and there was one aspect to the headlines that caught my eye. It requires a longer article.
At this point I thing Q1 ’20 S&P 500 earnings are a real crap-shoot: even though the consumer is strong and the February ’20 employment report was very strong, how do you / we trust anything in terms of evaluating changes in consumption patterns and business work practices. Have things changed that much?
Q1 ’20 S&P 500 earnings growth has been revised down to expectations of 1% and for Q2 ’20 +3.5% growth. Those will likely go lower too.
The most interesting companies reporting this coming week could be Accenture (NYSE:ACN) and FedEx (NYSE:FDX). Accenture will give a good read into B2B, and FedEx will probably talk about China and the state of freight in Europe and trans-Pacific geographies.
Nike (NYSE:NKE) reports too.
Forward expectations for earnings will likely be as volatile as the S&P 500, with the probability of a bias to the downside.
We start getting Q1 ’20 earnings in 4 weeks, with commentary.